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Well, it's been 5 years now, and thanks to TPTB I reckon we're still no more than half way through this glacial bear market.

 

Halifax index is now down almost exactly by a third in real terms since the Q3-2007 peak.

 

I think that the market is probably going to take a further little lurch downwards over the next 5-6 months, thanks to usual seasonal weakness and post-Olympic reality. Still reckon my forecast for -2.5% 2012 is looking dead on.

 

 

 

Halifax House Price Index - August 2012

HPI_Press.jpg

There was little change in underlying house price growth in the UK over first eight months of 2012, according to the latest Halifax House Price Index.

 

Commenting, Martin Ellis, housing economist, said:

"Nationally, house prices continue to tread water, as measured by the underlying trend. Prices in the three months to August were fractionally lower (-0.3%) compared with the previous three months. House prices fell by 0.4% in August with the declines in the past two months largely offsetting the gains in the preceding two months.

 

"Overall, there has been little change in house prices so far this year with the UK average price in August at a very similar level to the end of 2011. A gradual upward trend in spending power, aided by lower inflation, should help to support housing demand in the coming months. Nonetheless, house prices are likely to remain flat over the remainder of 2012 and into next year."

 

Key facts
  • House prices in the three months to August were 0.3% lower than in the preceding three months. This was slightly worse than in July when there was a 0.1% decline in prices on a three monthly basis.
  • House prices declined by 0.4% in August. This was the second successive monthly fall, with these two decreases largely cancelling out the rises recorded in May and June.
  • Little overall change in prices over the first eight months of 2012. The average UK house price in August 2012 was 0.2% higher than in December 2011. House prices nationally are at a very similar level to three years' ago, at £160,256.

/more:
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Halifax has hit a new inflation adjusted low, 32% down now (based on CPI deflator).

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Well, it's been 5 years now, and thanks to TPTB I reckon we're still no more than half way through this glacial bear market.

 

Halifax index is now down almost exactly by a third in real terms since the Q3-2007 peak.

 

I think that the market is probably going to take a further little lurch downwards over the next 5-6 months, thanks to usual seasonal weakness and post-Olympic reality. Still reckon my forecast for -2.5% 2012 is looking dead on.

 

 

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Yeah looks like you might well be closer than my "up to" -5%. (Yes I did say "up to", however, you did give an exact figure, so you get the prize if it comes in at -2.5% :D ).

 

PS where are all the original forecasts, on this thread or another?

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Eerily empty streets of the Spanish ghost town built for 30,000 before property crash

 

Read more: http://www.dailymail.co.uk/news/article-2203278/Empty-streets-playgrounds-Spanish-ghost-town-built-property-crash.html#ixzz26SX7kuGc

 

 

 

=============================================

Not much of a story at the link but some "empty" photos are there. Lots of tumble weed

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Mean reversion awaits London:

http://www.ft.com/cm...l#axzz26LbmNmve

 

Greater London prices have SOARED relative to UK as a whole

 

grlondtouk.gif

Er, ah...

Obviously, there are opportunities for "arbitrage" - moving people and businesses out of London, to save money?

 

How do you do that?

You learn from London. Consider what makes it one of the greatest Walkable cities on the planet.

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Sad to say I have rolled over and offered on a house in London (offer accepted) and mortgage going through.

 

It seems very clear that all efforts will continue to suppress rates and support the indebted. The latest Fed QE makes this quite clear. Almost certainly the UK will follow.

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Yeah looks like you might well be closer than my "up to" -5%. (Yes I did say "up to", however, you did give an exact figure, so you get the prize if it comes in at -2.5% :D ).

 

PS where are all the original forecasts, on this thread or another?

 

On the other thread.. search on 2012 house price predictions.

 

I don't expect any change in base rates until there is a USD and/or GBP crisis, and no one knows when that will be, but I also wouldn't put my money on us making it through another election cycle without there being a major currency crisis.

 

The housing market won't collapse until there is a spike in interest rates, and can't rise when people are getting poorer through the effects of QE, so it is drifting in the twilight zone, like a vast expanse of no man's land.

 

If I were buying now I'd fix for 5 years. When I remortgage next year I'm going to fix for 5 years (I expect to have almost paid it off by the end of this).

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I am now a Bull.

 

This thread needs to be changed now. Fundamentals may have said otherwise but you can not fight the FED BofE ECB, unless you are Peter Pan and can wait a long time. It took 80 years for the USSR to collapse. Can you wait that long

 

As a forum sharing investments, we need to start looking at residential property in a different light especially against gold.

 

My own private view is to leverage up and if you have precious metals as a hedge then may be you will be in a favourable position to settle the outsatnding debt very quickly.

 

Your thoughts

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I am now a Bull.

 

This thread needs to be changed now. Fundamentals may have said otherwise but you can not fight the FED BofE ECB, unless you are Peter Pan and can wait a long time. It took 80 years for the USSR to collapse. Can you wait that long

 

As a forum sharing investments, we need to start looking at residential property in a different light especially against gold.

 

My own private view is to leverage up and if you have precious metals as a hedge then may be you will be in a favourable position to settle the outsatnding debt very quickly.

 

Your thoughts

 

I think you've been a bull for a while, right. That said you make a reasonable point, but only as far as a PPR is concerned not because property has suddenly become a good opportunity, in fact it is still a very bad bet as an investment. Buying somewhere to live for you and family is a different matter entirely.

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Make sense, CS.

 

/ HERE's an EMAIL EXCHANGE that I had recently with an agent offering London Property /

 

(First My most recent email, responding to the agent's email shown at the bottom)

 

I probably follow the Price data in London as closely as you do.

 

Here are two data sources:

http://tinyurl.com/GEI-data

http://tinyurl.com/GEI-london

 

Here's a Chart showing the Ratio of Greater London to Haliwide

http://imageshack.us/a/img337/8384/grlondtouk.gif

 

Over the last 12 months, I have noticed the following price changes:

====

Haliwide (Halifax/Nationwide) : down - 0.93% (to Aug'12)

Rightmove-Greater London : up + 8.81% (to Aug'12)

Knight-Frank PC London : up +10.27% (to July'12)

 

If prices are really up "moved significantly across Central London" in the last 12 months, that's an excellent reason not to buy - since I don't want to buy "an Olympic peak."

 

The property I mentioned below was a new one, a 3BR penthouse, 10 minutes walk from Canary Wharf, and a new Cross London station. I decided not to buy for various reasons, the main one being that my partner was not prepared to live in the flat - so I would have needed a tenant. When I went to visit the site (after dropping the deposit), the agent nearby said that the property would have been hard to resell at a profit, and my partner wanted to flip it.

 

I am pretty certain, that we will NOT be buying in so-called Prime London in the near future, because we have a price target, that is only achievable in areas not now considered prime. Even so, I will be looking for proximity to high-paying jobs, and infrastructure spending that is likely to benefit the area in which I invest.

 

At the moment, we are more interested in North America, because we like the pricing dynamics there better.

 

(THAT was written in response to the following one - which was a response to an earlier one,

saying I had decided not to buy a property near Canary Wharf, priced at GBP 350 psf,

and would not consider paying anything above GBP 500 psf):

 

 

I appreciate the email.

 

The market has moved significantly across Central London in the last 12 months (see attached).

 

“The London property market has continued to defy gravity since it bottomed out in Spring 2009 after the City banking collapse. Foreign buyers have flooded into London, drawn by the relative weakness of the pound and the capital’s status as a “safe haven” from political and financial instability elsewhere in the world.”

 

The boroughs that are highlighted are where we currently hold stock and are currently in the top 5 strongest boroughs of this year – our research is absolutely right.

 

These are the areas you should be buying in.

 

If you can find a property in Prime Central London for 500 psf you should snap their hand off for it.

 

I look at literally hundreds of properties in Prime Central London and this price simply does not exist.

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Agree, without nominal rises

 

 

I think you've been a bull for a while, right. That said you make a reasonable point, but only as far as a PPR is concerned not because property has suddenly become a good opportunity, in fact it is still a very bad bet as an investment. Buying somewhere to live for you and family is a different matter entirely.

 

Agree, without nominal rises houses are a mediocre investment at best. As a PPR there is an argument to be made.

Has anyone checked the mortgage market? This move by the Fed was the worst kept secret in history and has been front run by the market since May. Bonds FELL on the fed announcement.

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12 Sep 12 Prices Fall as Reality Bites Back (Report PDF)

 

no+ass+biting.jpg

 

Better duck, before something hits you !

 

"Asking prices for homes on the market in England and Wales retreat from

euphoric summer highs, as the stark reality of the UK’s economic woes and

rising mortgage costs brings sobriety to the market.

Asking prices fell in 8 of the 9 English regions and Wales over the last month."

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Since August yes, vey much so I have been a bull. I was a bull last year for London only and traded some Au for property and have since resold taking profits. Speculated yes to a degree yet but am now looking outside London for prime areas, The ripple effect will take hold.

 

Hmmm, there appears to have been a pre-olympic games peak. I've seen asking prices falling. Achieved London prices are also reported as falling.

We had this story trotted out 4 years ago just before the major falls. Hmmm. A slide of a few percentage points and that turns everything bullish again.

The fundamentals for Brits are still rubbish - in fact worse that 4 years ago IMO. Monetary policy is still holding up prices, nothing else.

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RIGHTMOVE in September

 

% Change in month % Change Past Year Ave house price Sep HPI

-0.6%
arrowDown.png
0.7%
arrowUp.png
£234,858
arrowDown.png
Aug HPI -2.4%
arrowDownSmall.png
2.0%
arrowUpSmall.png
£236,260
arrowDownSmall.png

Key points

 

  • New sellers drop average asking prices for the third consecutive month, down by 0.6% (-£1,402) on the month and 4.6% (-£11,377) on the quarter

  • The fifth anniversary of the run on Northern Rock provides an opportunity to reflect on the pre and post credit-crunch property market landscape:
    - Average price of a property coming to market this September is virtually unchanged on a year ago at £234,858 (+0.7%)
    - Prices this month also unchanged on five years ago (Sep 2007) at £235,176 – down just 0.1%
    - In contrast average asking prices in previous five years (Sep 2002 to Sep 2007) saw a 55% rise

http://www.rightmove.../september-2012

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Shipside : http://www.rightmove...tember-2012.pdf

=======

 

Credit-crunch losers include:

 

- Trapped renters: Over half of existing renters state they would like to buy but cannot afford to.

Shipside observes: “The inability of the majority of tenants to move out of the rented sector leaves

fewer vacancies for the fresh crop of households being formed, who are also struggling to buy. This

demand pushes up rents, so tenants lose by not being able to get onto the housing ladder and end

up paying more for living where they do not wish to be”.

 

- Mortgage prisoners: People in negative equity or with insufficient equity to fund their next move.

Shipside adds: “With property prices in the doldrums, the equity of many existing home-owners has

been eroded and, with lenders demanding higher deposits, those affected are unable to escape from

their restrictive mortgage predicament”.

 

- Downtrodden down-traders: Those at the upper-levels of the housing ladder looking to trade down

due to changing housing needs or a desire to release equity for retirement are finding they

outnumber those willing or able to trade up. Shipside comments: “Those trading down are feeling

the pressure of the ‘new market’. They had the upper-hand for years, selling to a seemingly endless

supply of trader-uppers. Down-traders became accustomed to seeing their equity and potential

retirement pot grow, and the current outlook is less rosy”.

 

- Cash-strapped north: While there remain active sectors in the northern half of the UK, the new

market norm punishes those with more restricted access to cash. Traditionally there is less access to

equity in the north. Shipside concludes: “The challenges for the market are considerable in many

parts of the country, but they are even greater in the north with its residents having not recently

benefitted from the same equity gains of their southern counterparts”

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Meralti

 

If nominal asset prices are being held in place through monetary policy and looks likely to continue, then they are the fundamentals in play at this momemt in time that I am interested in. The Buy to let brigade or I should say the smart players are not in it for the rental yield but capital gains made.If you see an opportunity in todays environment go for it but make sure you always know your prices.

 

As a side note. The big players are making Mayfair their target at the moment. On a £sqft compared to say Knightsbridge it offers them value for money. The Local Authority are in favour of conversion of many of the office buildings back to residential. These office blocks are selling for less than residental units when compared on a £sqft basis.

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Meralti

 

If nominal asset prices are being held in place through monetary policy and looks likely to continue, then they are the fundamentals in play at this momemt in time that I am interested in. The Buy to let brigade or I should say the smart players are not in it for the rental yield but capital gains made.If you see an opportunity in todays environment go for it but make sure you always know your prices.

 

As a side note. The big players are making Mayfair their target at the moment. On a £sqft compared to say Knightsbridge it offers them value for money. The Local Authority are in favour of conversion of many of the office buildings back to residential. These office blocks are selling for less than residental units when compared on a £sqft basis.

 

There may well be opportunities to make good returns in certain areas. What you're talking talking about is developing existing buildings for resale as residential flats, which is a different game to buying completed property units - and it's different outside of central London.

 

The monetary policy is likely to continue as is; but it is, and likely to continue to have, a steadily decreasing effect. The effect per £ of QE is less for every round, this is clearly the case and well documented actually. Simply drawing a straight line into the future is the same stupid mistake that was made all the way up to the crunch.

 

I maintain that nominal rises outside of central London are unlikely. If prices do not fall nominally (ie QE continues to work to maintain them) then real prices will be eroded slowly by inflation, making property a bad bet for anything other than a PPR.

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There may well be opportunities to make good returns in certain areas. What you're talking talking about is developing existing buildings for resale as residential flats, which is a different game to buying completed property units - and it's different outside of central London.

 

The monetary policy is likely to continue as is; but it is, and likely to continue to have, a steadily decreasing effect. The effect per £ of QE is less for every round, this is clearly the case and well documented actually. Simply drawing a straight line into the future is the same stupid mistake that was made all the way up to the crunch.

 

I maintain that nominal rises outside of central London are unlikely. If prices do not fall nominally (ie QE continues to work to maintain them) then real prices will be eroded slowly by inflation, making property a bad bet for anything other than a PPR.

 

Hi Meralit,

 

What do you think about a BTL as a pension instead?

 

I ran an example some time back (hoping for someone to show me my error, as it actually got me considering the idea), but it got no responses (that's not to say it was correct).

 

With inflation falling and now wages almost catching up, crazy low long term fix rates (and likely to get lower soon), and yields of 6-7%, then even if they subsidise the renter for several years, the return they will get once the mortgage is paid off will likely be a better return than available from equivalent payments into a private pension over that period.

 

Example (please pick apart, as I’m almost convincing myself to sell the house and get a couple of BTL's laugh.gif ).

 

I pay ~£10k per year into my pension.

After 25 years (£250K pot) I will get a return of ~ £10k per year

 

OR

 

Even if I have to pay £2K per year subsidising someone renting a flat I bought at £10k per year. Rents rise over the years, so after say 10 years no more subsidy.

After 25 years (i.e. 10 years of subsidies so a £20K pot) and the mortgage is paid off (Even if rents don't rise, then 25 years at 2K put in by me = £50K pot) and an income of £10K per year (after accounting for £2k PA maintenence etc).

 

Although I don't agree with it (AFAIC, it needs serious regulation changes, and far more rights for renters), I can see why some do it.

 

Obviously there will be a deposit to consider, but even after that, it seems that you are left with an asset and also an income.

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Is a pension not an investment?

JD, you have not considered tax efficiencies here. It will drastically alter your calculations.

 

£10k into your pension is not the same as £10k into a BTL. The pension contribution is from your gross pay, the BTL is from your already post tax income, then furthermore any income you draw from the property rental will be taxable and any profit from sale will be also be taxable.

 

Now, if you consider that if your employer runs a pension schemes on a matched contribution basis, you could be looking at giving up £32k or so of pension contribution to put £10k into a BTL.

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Is a pension not an investment?

JD, you have not considered tax efficiencies here. It will drastically alter your calculations.

 

£10k into your pension is not the same as £10k into a BTL. The pension contribution is from your gross pay, the BTL is from your already post tax income, then furthermore any income you draw from the property rental will be taxable and any profit from sale will be also be taxable.

 

Now, if you consider that if your employer runs a pension schemes on a matched contribution basis, you could be looking at giving up £32k or so of pension contribution to put £10k into a BTL.

 

Cheers Van, however, if it is in a SIPPs does that not cover the tax issue? (I'm no expert on SIPPs)

 

AFAIK the tax on rental can be offset via mortgage interest?

 

Also it would be in addition to my other pension if I were ever to do it (unlikely TBH).

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Dimitri Orlov has a sensible idea.

 

He talks about how :

 

+ Because of the poor jobs market, children are moving back with their parents,

+ With a single household: children have little savings, and parents have pensions

+ The family is being "intermediated" by banks - the parents savings is doing poorly, and children cannot borrow

 

The FAMILY SHOULD DISINTERMEDIATE THE BANKS - and act as their own bank, because the banking system is going to fail them.

 

The parents might consider buying a bigger home, or even a farm or business with their pension money,

that would provide a job for the children.

 

This would have a better chance of working out, than "trusting" the banking system

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Hi Meralit,

 

What do you think about a BTL as a pension instead?

 

I ran an example some time back (hoping for someone to show me my error, as it actually got me considering the idea), but it got no responses (that's not to say it was correct).

 

 

 

Obviously there will be a deposit to consider, but even after that, it seems that you are left with an asset and also an income.

 

IMO you need to consider the following:

 

1. Size of the deposit - the lower the LTV the better, but this incurs an opportunity cost

2. Type of mortgage - it must be repayment for your scenario to work. If you're IO you're relying on rising prices.

3. Future rises in mortgage rates

4. Voids

5. Bad tenants, general hassle

6. The unpaid time you will spend managing the property

7. Taxes on income, but more importantly future taxes. I'm pretty sure that R&C will come after landowners eventually, they are currently under taxed and cannot move their assets.

8. Potential nominal falls when QE eventually fails.

9. Real value falls due to inflation

10. Owning an asset you cannot defend when QE eventually fails and the local constabulary are no longer being paid.

11 Changes in tenancy law giving renters more rights, the law is weighted in favour of landlords at the moment.

 

If you already own a BTL and have a 100% repayment mortgage and it's making money I would keep it. If its on IO then I would be looking to sell. Personally I wouldn't invest in BTL for a few years yet.

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